The boss of an Ilkeston-based credit union has warned of the dangers of using payday loan firms, as more townsfolk get into trouble .
Seamus Grant, from Erewash Credit Union, which serves 3,000 people across the borough and neighbouring Amber Valley, said his firm based at the Ilkeston Co-op department store, was seeing higher number of loan applications than usual this January
He blamed the rise on families borrowing more to pay off ‘quick-fix’ loans companies, which often charge steep interest rates.
He said: “When you think we give out our loans at a maximum interest rate of two per cent per month, some credit lenders offer a 4,200 per cent typical APR – but it can be even more.
“January used to be the quietest month but we are just constantly getting people in who have taken out payday loans to cover Christmas and now need to take out a second loan from us to repay them.”
Mr Grant has urged people feeling the post-Christmas pinch to figure out debt management plans, or to consider borrowing from the not-for-profit credit union before considering using the payday lenders.
He said one man, who recently visited the union’s Ripley branch, needed £3,000 to pay off a payday loan lender, having originally borrowed just £900.
Another customer was facing an 11,165 per cent interest rate on their loan as the rates had built up over a period of time.
Mr Grant urged borrowers not to ‘bury their head in the sand’, adding: “A lot of people can be very embarrassed when it comes to talking about their debt.
“They bury their head in the sand and before it’s too late, they’re in trouble.”
To talk about managing debt, taking out a loan, or setting up a savings account with the Erewash Credit Union, call 0115 932 9493 or visit the South Street branch.